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What is the cash allowance?

Cash allowance is a right guaranteed by law to all employees registered under the CLT, which allows the sale of one third of the vacation to the company without the employer’s option to refuse.

This right makes it possible to receive 10 more days in vacation pay, for example: During the vacation month, the employee will receive wage πŸ‡§πŸ‡· Constitutional Third (β…“ of vacation) πŸ‡§πŸ‡· 10 days of cash allowanceπŸ‡§πŸ‡· And the amount you will receive is based on that calculation. To clear your doubts, continue reading.

What this article covers:

What is the cash allowance?

The cash allowance is an employee’s right to sell up to a third of their vacation to the employer to receive an extra amount. This right belongs to the employee and does not depend on the employer’s authorization, only on the employee’s will. That is, the employer has the obligation to accept the purchase of one third of the employee’s vacation if requested within the correct period.

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It is a very well-known right in companies, as many even leave this information open to employees, but many do not know that this right belongs entirely to the employee and end up not enjoying it even though it is their total decision.

Every employee registered with the CLT is entitled to 30 days of vacation after a year of work, these vacations can be given in common agreement with the company, it can be taken all at once or in installments and at least 10 days can be sold for the cash allowance .

What is the cash allowance for?

The cash allowance works as a financial benefit for the employee and does not cause any harm to the employer. With the allowance, the beneficiary can receive more in a specific month and use that money the way he wants and still rest for the rest of his usual vacation. The amount received in the allowance is not different from what would already be received, but it can be a great financial help in some month.

What do I need to apply for the cash allowance?

Despite being an employee’s right and being decided only by the employee’s will, the cash allowance can only be requested up to 15 days before the end of the 12 months of vacation entitlement.

For example, an employee who joined in January 2021 will be able to take vacation from January 2022, his request for cash allowance must be made up to 15 days before the release of his vacation, not necessarily when to take the vacation, but when you can take it out.

What do you need to apply for cash allowance

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If that same beneficiary takes his vacation in March 2022, for example, but did not request the cash allowance 15 days before the end of his first 12 months (in January), he will not have a guaranteed right to the sale, this will now depend on the employer who can deny the payment.

In addition to the 12 months of work, the employee also needs to have CLT registration. The benefit is an employee’s right and therefore depends only on him to request it, respecting the maximum request time.

How does the cash allowance work?

The cash allowance cannot be paid to the employee by the company on a mandatory basis, only the employee can request it and it cannot be denied as long as it is within the application period.

The right is to sell up to a third of the vacation and up to 10 days, that is, even if the beneficiary is entitled to more than 30 days of vacation, he can only sell 10 days, even if that does not mean a third. Otherwise, where the beneficiary is entitled to less than 30 days of vacation, he can sell the equivalent of one third, even if it does not reach 10 days.

What are the benefits of cash allowance?

The biggest reason employees sell a third of their vacation is to get paid up front and enjoy it. Many employees don’t mind taking less vacation days in exchange for being paid more, this varies from financial need to rest.

For the employer, the advantages are that financially it does not change anything that should already be paid to the employee and he will still work for 10 days more than he would need, having only 20 more days of absence for vacation, so the employer does not lose anything and still earns the active employee for another 10 days within the vacation vesting period.

And the disadvantages?

The cash allowance does not guarantee any moral or financial penalty either to the employee or the employer, therefore the only negative point of its use is the reduction of the guaranteed rest period of the vacation, which can be reduced from 30 days to 20 days.

How do I know if I am entitled to the cash allowance?

The right belongs to the entire employee and therefore anyone registered under the CLT and who has not yet had their full 12 months (before the period of possibility of acquiring vacations) can request the benefit from their employer.

The only possibility of losing this right is in case of non-request within 15 days before the vacation acquisition date, however this can still be negotiated with the employer.

How to calculate cash allowance

The part that can confuse the most in terms of the cash allowance is the amount to be received. The simplest calculation that can be done is dividing the gross salary by 30 and then multiplying it by 10, this calculation does not include overtime and unjustified absences.

  • Gross salary: BRL 2,400.00 / 30 = BRL 80.00
  • Cash allowance: 80 x 10 = BRL 800.00

This amount may also increase if the employer pays the Constitutional Third together. The amount of cash allowance also cannot have INSS deduction and Income Tax and must be declared in payslip separately.

The employee is fully entitled to the cash allowance and can be requested if he/she so wishes, always considering a shorter rest period that may impact physical or mental health. That’s why it’s important to balance whether the financial need is really more important than the rest.

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